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Adidas Group Q3 sales stable on currency-neutral basis
07
Nov '13
adidas Group announces results for the third quarter of 2013.

Highlights:

-Strong momentum in Latin America and Greater China offsets declines in Western Europe and North America

-Reebok continues to grow with revenues increasing 5% in Q3 

-Net borrowings decline 47% to € 180 million

-Management confirms full year guidance

During the third quarter of 2013, adidas Group sales were stable on a currency-neutral basis. From a regional perspective, currency-neutral revenues in Western Europe decreased 6%. This was mainly due to high prior year comparisons related to the sell-in of event-related

products for the London 2012 Olympic Games as well as the ongoing macroeconomic challenges in the region. In European Emerging Markets, currency-neutral sales increased 2% with growth in most of the region's markets. Group sales in North America were down 5% on a currency-neutral basis.

This development was mainly due to sales declines at TaylorMade-adidas Golf owing to a more challenging golf market as a consequence of the late seasonal start and lower rounds played.

In Greater China, Group sales were up 9% on a currency-neutral basis, due to continued momentum across all channels. Currency-neutral revenues in Other Asian Markets increased 4%, driven by sales increases in most of the region's major markets. In Latin America, currency-neutral sales grew 12%, with strong growth in all key markets.

From a brand perspective, third quarter sales at adidas remained stable on a currency-neutral basis. Currency-neutral sales at Reebok grew 5%. Revenues in the TaylorMade-adidas Golf segment declined 16% on a currency-neutral basis.

Reebok-CCM Hockey sales grew 4% currency-neutral, while revenues at Rockport decreased 4% on a currency-neutral basis. Currency translation effects had a negative impact on sales in euro terms. Group revenues declined 7% to € 3.879 billion in the third quarter of 2013 from € 4.173 billion in 2012.

Third quarter gross margin increases 1.9 percentage points

The Group's gross margin increased 1.9 percentage points to 49.3% (2012: 47.4%) in the third quarter. A more favourable pricing, product and regional sales mix as well as a larger share of higher-margin Retail sales more than offset the negative effect of a less favourable hedging rate. Group gross profit declined 3% to € 1.913 billion (2012: € 1.978 billion).

Other operating expenses as a percentage of sales increased 2.6 percentage points to 39.6% compared to 37.0% in the prior year, mainly related to the further expansion of the Group's own-retail network. The Group's operating margin increased to 11.9% from 11.8% in 2012, as a result of the gross margin increase.

Operating profit declined 6% to € 463 million compared to € 494 million in 2012. The Group's net income attributable to shareholders declined 8% to € 316 million (2012: € 344 million). Basic and diluted earnings per share for the third quarter decreased 8% to € 1.51 (2012: € 1.64).

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